Did you know that it could cost you more than a late fee if you make your insurance payments late? That's right, not only will you accrue late fees, in most cases, but you could lose your current coverage and destroy your future rates.

Probably the worst-case scenario is that you send in your payment too late, and your insurance policy gets  cancelled without you even realizing it.  Imagine the danger of driving around without insurance coverage that you thought you had.

Receipt of your payment by the company does not necessarily constitute reinstatement of your policy. You may  think you're covered because you mailed the payment, but that may not be the case. When the insurance company receives your payment after your policy was cancelled, they may mail it back to you.  In some cases, they may apply the payment to any balance you may still owe.  In this situation, you may be in limbo for a while, with no idea what the status of your policy.  Don't assume you have a policy simply because you haven't received any notification of termination.

If you have an accident after this ordeal, it could become a disaster.  Calling your insurance company to report an accident is a bad time to find out you are no longer insured. 

Being involved in an auto accident without insurance coverage is not a good thing. You can lose your license, even if it was not your fault.  Many states have financial responsibility rules that apply to auto accident and can revoke your driving privileges regardless of who is considered to be at fault.

Another consequence to consider is that your insurance company may find that after reviewing your payment history, they no longer wish to insure you. They may issue a non-renewal notice, stating that they are no longer willing to insure you when your policy expires.  Then you will have to deal with another insurance company that can see the incident in your report and offer a huge rate increase from what you were originally paying.

It is also possible that your insurance company would be willing to renew your policy, but require that you pay in full for the entire term.  At this point, you would not be able to make late payments. If you are unable to pay  for the full policy term, you may decide to shop for a new policy.  Unfortunately, other companies may also require that you pay in full.

Consider that you may also damage your credit score.  Many insurance companies review your credit and prior insurance history when determining what rates to charge you.  Having made previous late payments on your insurance policy could cost you extra when you buy a new policy. You might have ordinarily qualified for better rates, but because you made late payments on your previous policy your new one is going to be quite inflated.

Contact your agent or the insurance company if you cannot make your payment on time.  They will be able to provide you with information regarding any late fees or cancellation dates.  They may also be able to provide advice or propose an alternative solution.

Disclaimer: This article is for information purposes. It should not be interpreted as a recommendation to buy or sell any insurance product, or to provide financial or legal advice. This information is provided for information purposes only.